The First Tycoon: The Epic Life of Cornelius Vanderbilt

by T. J. Stiles

  And everywhere Corneil saw men—almost only men—all eager to head for the mines or make money from those who were going. At the time the James L. Day sailed through the Gate, one resident counted some two hundred ships in the bay, from virtually every nation with a port on the Pacific. Russians and Australians, Peruvian Indians and Indian Brahmins, Japanese, Mexicans, and Maori, all passed up and down on urgent business. The town was “crowded with human beings from every corner of the universe and of every tongue—all excited and busy, plotting, speaking, working, buying and selling town lots, and beach and water lots, shiploads of every kind of assorted merchandise, the ships themselves, if they could.”36

  No sooner had the Day pulled into port and the crew begun to unload the disassembled hull of the steamboat than Corneil deserted. Three others abandoned ship with him. He slipped into a town populated largely by young men awash in money with no authorities to inhibit their impulses. Making his way past the tents and shanties into the city's center, he discovered the finest buildings in San Francisco: “Gambling saloons, glittering like fairy palaces,” as a citizen wrote a few years later, “studding nearly all sides of the plaza, and every street in its neighborhood.… Monté, faro, roulette, rondo, rouge et noir and vingt-[et-]un, were the games chiefly played. In the larger saloons, beautiful and well-dressed women dealt out the cards or turned the roulette wheel, while lascivious pictures hung on the walls. A band of music and numberless blazing lamps gave animation and a feeling of joyous rapture to the scene.” All night the gambling went on, with runaway sailors and runaway slaves elbowing between wealthy merchants and ministers of the gospel, all drinking, eating, smoking, gaming.

  Gold was everywhere, in solid lumps or bags of dust, thrown about carelessly, measured indifferently, won and lost at the tables with stunning rapidity (as much as $20,000 riding on a hand, it was said). And with the money and the revelry came violence—a flashing knife over a contemptuous word, the crack of a revolver over an attempted theft, a flurry of fistfights and formal duels. “And everybody made money,” wrote our San Franciscan, “and was suddenly growing rich.”

  It is difficult to know how all this affected young Corneil, because we know so little of his childhood—just a fleeting image of a furtive second son, overshadowed by his overbearing father, occasionally seized by epileptic fits. But he landed in this most impressive place at an early and impressionable age. By every indication, the San Francisco of 1849 stamped him with its image—a city of gamblers and speculators, confidence men and killers. Cornelius J. Vanderbilt stood in the saloons that remained open all night, swam through cigar smoke and shouted over blaring music, smiled at female card dealers and calmed belligerent miners, learning to talk, learning to charm.

  The fever of the place infected even Captain Van Pelt of the James L. Day. He and his crew reassembled the steamboat Sacramento and started to run it up the eponymous river on September 14; meanwhile his second-in-command, James S. Nash, took command of the schooner and entered the carrying trade on the bay. And they made money, and suddenly grew rich. Within two months, the Sacramento earned a profit of $40,000, and the James L. Day another $10,000. Unfortunately for Vanderbilt and the other owners, Captain Van Pelt allied himself with a San Franciscan, James H. Fisk of Turner, Fisk & Co., who saw no reason to remit such earnings all the way across the continent. Fisk and Van Pelt decided to auction off the two boats, even though they had no authority to do so. They named a time just before the departure of a Pacific Mail steamship from San Francisco, an hour when the city's merchants were frantically busy with correspondence and consignments of gold for the Atlantic coast. Then Fisk held the auction fifteen minutes ahead of schedule. With no other bidders, he bought the boats himself at ridiculously low prices. He soon sold them, winning a very large profit.

  Corneil, on the other hand, did not do so well. Not long after abandoning ship, he ran out of money, most likely at the tables, and issued a draft on his father—a draft his father refused to honor.37 But it was the excitement rather than the bad debt that endured in his memory. It is impossible to contemplate the Corneil of later years without imagining that he carried with him those heady days of utter abandonment and strained to his utmost to recapture them. “Happy the man who can tell of those things which he saw and perhaps himself did, at San Francisco at that time,” wrote our witness. San Francisco would haunt Corneil to the end.

  THEY CALLED HIM “INDIANA WHITE,” though the records of the House of Representatives name him Joseph L. White. Curiously, his contemporaries never described his physical appearance; he seems to have cut an eminently forgettable figure. It was his voice they remarked on, his gift for rhetorical explosions and diamond-cutting logic. In 1840 he emerged from an obscure youth in upstate New York, where he had studied law, to become a powerful speaker in Indiana for presidential candidate William Henry Harrison. White was “the most fascinating orator that ever mounted a stump in the state,” in the words of one newspaper. “Probably since stump speaking was invented no effort was ever received with such unqualified and extravagant delight, not merely by the ‘roughs,’ who could appreciate its ‘hits,’ but by cultivated men, who could penetrate its arguments.” He won election to the House that year as a Whig. In Washington he withered, much to everyone's surprise. He possessed “a genius,” the same writer observed, “that only lacked the balance of character to be one of the most powerful men in the nation.” Perhaps, in his only term in Congress, his unbalance began to reveal itself.

  Still, White was smart, in every sense that word carried in 1843, when he moved to New York and started to practice law. “He was one of the most social and genial men I have ever met, and a most engaging and eloquent conversationalist,” remarked one New Yorker. “His apropos speeches, his witty and good-humored repartees, were inimitable.” He emerges from these accounts as a highly confident man of sharp wit, a sophisticated and well-connected charmer, a master of both courtroom histrionics and backroom negotiations. As a former politician, he also had ties to the new Whig administration of Zachary Taylor, elected president in 1848. He was, in short, a fixer.38

  How and when Vanderbilt first approached White remains uncertain, though two dates suggest the moment when they joined in the Nicaragua canal project. On March 24, 1849, Vanderbilt resigned the presidency of the Elizabethport Ferry Company, as if to concentrate his efforts on something else. On March 29, White sent a letter from a hotel in Washington, D.C., to the new secretary of state, former Delaware senator John M. Clayton. “I have come from New York expressly to see you on business of importance, & which admits of no delay,” he wrote. “Will you oblige me by writing a note, informing me at what hour to day or tomorrow I can see you privately.… I have come on behalf of seven New York gentlemen & on their errand. I know something of your engagements, & would not press for an interview under ordinary circumstances.”39

  Clearly White was an emphatic man, impressed with his own importance. In this case, though, he understood his audience. Back in 1835, Senator Clayton had sponsored a bill to encourage Americans to dig a canal across Nicaragua. Now he came into office as secretary of state with U.S. territory on the Pacific, massive quantities of gold coming out of California, and tens of thousands of Americans migrating there. The canal idea had grown dramatically more important for American foreign policy. Clayton listened with great interest as White told him that Vanderbilt had organized the American Atlantic & Pacific Ship Canal Company, and had dispatched David White (Joseph's brother) to Nicaragua to negotiate with the government there.

  Not many days later, Clayton appointed Ephraim G. Squier the chargé d'affaires to Guatemala (the chief diplomatic post in Central America). “Considering the motive which influenced you to make this appointment so speedily,” Joseph White wrote to Clayton on April 3, “those with whom I am associated & myself… express their & my very sincere acknowledgments to you; and I beg you to examine this written assurance, that under no possible combination of circumstances will I fail to
reciprocate this great favor in any mode which you may designate.”

  This curious letter reveals White as not only emphatic, but insinuating as well—not to mention vain. He assumed Squier's appointment had been a favor, to be repaid on demand. It was an assumption that came naturally to the scheming brain of a political fixer. Clayton, by contrast, was a very high-minded man, focused not on rewarding friends but on public policy. Ignorant of this, White blustered on, listing orders that should be given to Squier to assist in the canal intrigues—“instruct him to avoid my brother (now in Nicaragua) in securing the grant”—and assuring Clayton that the company's tolls would discriminate against the British in favor of American ships.

  If he thought this would prove appealing, he was mistaken. Clayton believed that any canal must be neutral, or it would lead to “more bloody and expensive wars than the struggle for Gibraltar had caused to England and Spain.” Yet he seems to have tolerated White's insinuations in order to accomplish the larger goal. As he wrote in his instructions to Squier, “A passage across the isthmus may be indispensable to maintain the relations between the United States and their new territories on the Pacific; and a canal from ocean to ocean might, and probably would, empty much of the treasures of the Pacific into the lap of this country.” Clayton thought that the canal was essential to the national interest, but he also knew that Congress would never fund its construction. He needed Vanderbilt and his backers as much as they needed him.40

  Joseph White happened to reveal to Clayton the names of those backers, who have previously escaped historical notice. The original organizers of the canal company included Cornelius Vanderbilt, of course, along with White and his brother David, merchants Nathaniel H. Wolfe and Edmund H. Miller, and three Wall Street firms: Livingston, Wells & Co.; Hoyt & Hunt; and Bowden, Groesbeck & Bridgham. The last-named firm suggests the disguised involvement of Daniel Drew, for David Groesbeck was one of Drew's personal brokers and close allies.41

  They were not the only American businessmen seeking the rights to a crossing in Nicaragua. No sooner had Squier arrived there than he learned that another firm claimed to have signed an agreement with the government that granted them monopoly rights for a canal or railroad across the isthmus.42 Vanderbilt's canal project had scarcely begun, and already it was mired in the political jungles of Central America.

  ON AUGUST 26, DAVID WHITE signed a contract with the Nicaraguan government. It gave the exclusive right to build a canal to Vanderbilt's American Atlantic & Pacific Ship Canal Company in return for $10,000 a year, 20 percent of the annual profits, and a stake in the business. “It will also be observed that the grant is not only for a canal, but for a rail or carriage road,” Ephraim Squier wrote to Clayton, “a provision which will enable the company to open a route at once across this isthmus, more rapid, easier, cheaper, safer, and more pleasant, than that by Panama. In distance, this route will save 300 miles on the Atlantic and upwards of 800 on the Pacific.”43

  For Vanderbilt, the transit route promised to make his Nicaragua adventure profitable during the prolonged canal construction by allowing him to carry passengers across the isthmus. But he may not have realized how lucky he was to get any contract at all. White negotiated it during a rare moment of peace and unity in a country whose divisions would plague Vanderbilt in ways he scarcely imagined in 1849.

  The Spanish built cities in Nicaragua a century before Squanto taught the Pilgrims to plant corn, but they left an inheritance of perpetual civil war. When Spain's empire collapsed in 1821, Nicaragua briefly fell under Mexican rule; then it joined the United Provinces of Central America from 1823 to 1838, when it finally assumed full sovereignty. Independence, unfortunately, brought little sense of national cohesion. Unlike virtually every other former Spanish province, it lacked a single metropolitan center. Two cities—León and Granada—fought for dominance. As in other Latin American nations, two parties, generically known as the Liberals and the Conservatives,*2 dominated politics, but here they were identified with the two cities: the Liberals made a bastion of León, while the Conservatives were entrenched in Granada. The cities' patricians waged war without end, fighting less out of ideology than geographical rivalry, commanding armies of unmotivated Indians and mestizos who were dragooned out of the sparse population of only 275,000 or so. In 1849 alone, no less than three men declared themselves the supreme director, as the Nicaraguan chief executive was called. “Nothing exists but our misfortune,” declared a government report. “One man fights another, one family opposes another, one town attacks another, all with such a variety of different interests that we will never be able to form a state.”44

  Fortunately for Vanderbilt, a popular uprising united Nicaragua's warring elite in 1849. They joined forces to suppress the rebellion, and executed its bandit leader a month before they signed the canal contract (superseding the agreement with the rival company, which had been negotiated before the settlement of the civil war). The unity government embraced Vanderbilt's proposal; for centuries, Nicaraguans had dreamed of a canal that would bring the riches of the world through their borders. “Where is… the patriot, the wise man,” asked one Nicaraguan newspaper, “who does not want to see this productive project carried out?” Enthusiasm for the North Americans swept the country, as Squier arranged a treaty that promised U.S. protection to Nicaragua.45

  The enthusiasm was mutual. “Certain American citizens, whose judgment, energy, and pecuniary responsibility need no better voucher than the designation of ‘Cornelius Vanderbilt and others’… have chosen that [canal route] which follows the river St. Juan and crosses the Nicaragua lake,” rejoiced the United States Magazine and Democratic Review, an influential Democratic Party journal. “But,” it added, “suddenly there arises a lion in the path—that is to say, a sort of lion.”

  Yes, a lion. Vanderbilt had slipped through the shoals of Nicaragua's civil wars through sheer good luck, only to confront the opposition of America's most persistent European rival: Great Britain. As soon as he secured his contract with Nicaragua, the British consul in New York published a warning, forbidding him to begin work on the canal.46 What had begun as a simple business venture was fast becoming the epicenter of dangerous tensions between Washington and London. If ever Vanderbilt needed the services of Joseph White, it would be now. The Anglo-American conflict over Nicaragua would require intensive diplomacy at the highest levels, and more than once it would threaten to descend into war.

  Ever since the War of Independence, a significant proportion of Americans had nursed a resentment of Britain as the monarchical antithesis of republican ideals. More to the point, tensions between the two nations had flared over their influence in Latin America after the collapse of the Spanish empire. Despite the promulgation of the Monroe Doctrine in 1823, Britain had largely filled the vacuum left by Spain in Central America. Leapfrogging from the colonies of Jamaica and British Honduras (later Belize), English merchants had come to dominate the region's trade. In 1841, the British had extended their sway by proclaiming a protectorate over the “kingdom” of the Miskito (corrupted to “Mosquito” by the British) Indians on Nicaragua's sparsely populated Atlantic coast. The Nicaraguans regarded it as an insult to their sovereignty—an insult the British had compounded in 1848, when they had occupied San Juan del Norte and renamed it Greytown to block any canal or transit route. In the United States, where the burning of Washington in the War of 1812 remained a living memory, the sight of the Royal Navy guarding the mouth of the San Juan River looked like an act of war. “Better by far to lose California and Oregon,” the United States Magazine and Democratic Review wrote, than “Britain or any other great power should… stand in the way between us and our own.”47

  Not all Americans breathed fire and steel. Secretary of State Clayton, for one, wanted an accommodation. The canal was a strategic imperative, he wrote to Abbott Lawrence, the United States minister to Great Britain. “Without some such ship navigation, it may be difficult, at some future period, to maintain ou
r government over California and Oregon.” He instructed Lawrence to offer a neutral canal, open to all on equal terms.48

  Clayton's initiative was complicated by a common problem in nineteenth-century global diplomacy: the independence of local agents, who operated for weeks or months without instructions from their capitals. The seizure of San Juan del Norte (to be called Greytown hereafter) was the work of the intrusive Frederick Chatfield, Britain's man in Central America since 1834, who worried that Nicaragua would be “overrun by American adventurers.” He recommended that the entire country be put under “a protectorate… favorable to British interests.”49 Lord Palmerston, the foreign secretary, took a dim view of the often-belligerent United States and generally supported Chatfield. But the rest of the British government feared the consequences of being too belligerent over too little of consequence. Prime Minister Lord John Russell declared that the Mosquito protectorate was “not worth a barrel of gunpowder on either side.”50

  London responded to Clayton's overtures by sending a new minister, Sir Henry Lytton Bulwer, who presented his credentials in Washington at the end of November 1849. Palmerston had given him the mission of making a comprehensive settlement. He was to agree to an American-built canal in Nicaragua, but without ceding the Mosquito protectorate. The sly and polished Bulwer would prove more than equal to the task.

  Joseph White checked into the Thomas Irving House in Washington just as Bulwer arrived in the capital. With the future of the canal company resting on these negotiations, he called on the new British minister. Bulwer, by definition, was a man of the world; he realized that he could take advantage of White's vanity and taste for intrigue. “In America nothing is done with the Govt.,” Bulwer wrote. “One must influence the people who influence the Govt.” He subtly cultivated White, in part by letting White cultivate him. Knowing the huge cost of building a canal, Bulwer dangled the bait of British capitalists, hinting that they wanted to buy a large stake once a treaty had been signed. White abruptly abandoned his anglophobic rhetoric of the year before. Why, he and his associates had been surprised that Nicaragua should give the United States special advantages over Britain. The canal contract would be amended at once!51